As far as we can tell, we’ve narrowly avoided falling into another global recession. The world economic outlook indicates that the risks to global growth are ‘broadly balanced’ and global recovery is continuing at a steady pace.
In other words, things look to be settling down on the international front and the world economy is growing.
When you break this down by region, however, things start to look a little bit messier. Growth is predicted to accelerate in some areas, slow in others, and in a few places do both one after the other.
Then, when you try to use this information to predict consumer spending, you also uncover rising debt, reduced financial support and elevated bank rates – not to mention the potential global knock on effect of November’s US presidential election and the increased risk of geoeconomic fragmentation.
For marketers, trying to understand how much disposable income their customers will have over the next couple of years has become a bit of a car crash. So, to make it easier, let’s take a look at the economic forecasts broken down by region…and then discuss why none of it really matters anyway.
Mixed forecasts around the globe
In the US, 2024 has started on relatively strong economic footing. Despite the elevated inflation and higher interest rates in 2023, consumer spending held up well and indicators of business activity, labor markets, sentiment and inflation have all been moving in the right direction. That said, while a recession is no longer expected, consumer spending growth is predicted to slow down to a standstill by Q3, owing to rising debt, dwindling savings and elevated inflation.
Further south, in Latin America, GDP growth is forecast to slow down in key economies. Though consumer spending growth is expected to moderate in comparison with 2023, strong labor markets suggest that it will continue to remain resilient. The possibility of higher food prices does however present a key risk factor.
Forecasts in Europe indicate a modest acceleration of GDP growth in most countries, however this is likely to remain below trend. The share of consumer spending on discretionary categories is increasing, which likely means European’s will be allocating more of their budget for goods. Additionally, following a shallow recession at the end of 2023 the UK’s economy is back to growth, with studies predicting a 3.2% rise in 2024 retail sales.
Looking towards the East, the MENA region will see strong economic growth in the Gulf Cooperation Council (GCC) as diversification efforts are driven by expansionary fiscal policy. Outside of the GCC, some countries are trying to reduce macroeconomic imbalances by tightening policy and, overall, tourism looks likely to remain the region’s most positive economic driver.
Resilient domestic demand and the continued recovery of the tourism sector have contributed to expectations for the APAC region to be the fastest growing economy in the world over 2024. Predictions suggest consumers will allocate more towards discretionary spending, rather than essentials, with a larger share spent on goods. In China, however, economic growth is expected to slow over the year ahead. While data over the first few months of the year beat forecasts, many believe its growth model to be unsustainable and view its 5.0% GDP growth forecast as ‘ambitious’.
What do these forecasts mean for marketers?
Regional economic forecasts can be a great starting point for marketers, offering insight into how much disposable income their audiences may have and where they are likely to spend their money. Combine this with your own customer data and performance analytics and it can help you optimize spending to effectively target consumers with relevant messaging.
That said, these forecasts should be taken with a pinch of salt, particularly in today’s economic climate. The reality is that there are a broad range of variables – from geopolitical tensions to shifting market dynamics – that can change these predictions in an instant. They should be taken more as a guide than a roadmap.
The uncertainty also underscores the importance for marketers to adopt a flexible and agile approach to their budget planning and execution. The ability to quickly respond to changes, not just in economic forecasts but in consumer behavior and market conditions, has become a key competitive advantage for brands. While initial strategies can be informed by these growth predictions, there must be an ongoing process of adjustment and optimization to stay aligned with the actual market environment.
To do so, marketers must be prepared to leverage consumer data, market analysis, and real-time feedback loops to identify which channels are currently delivering value and which are not. This will help guide the reallocation of resources to proven channels and the exploration of new revenue streams that may arise from changing consumer behavior and emerging market trends. It can also quickly identify underperforming investments or strategies, which can then be eliminated or adjusted to improve overall marketing efficiency and ROI.
Keep informed, keep agile
While the world’s economic outlook for the next couple of years looks to be cautiously optimistic, the varying projections from different regions make it difficult to predict consumer spending accurately.Couple that with the general uncertainty of life and, realistically, consumer spending in 2024 remains anyone’s guess.
What we can tell, however, is what is working well for us as a brand. Instead of focusing on external factors, we should be leveraging our own data-driven insights to adapt swiftly to the changing conditions, optimizing budget allocations and identifying both promising opportunities and areas for cost reduction.
The ability to remain flexible, informed, and responsive in the face of evolving economic circumstances will be key to navigating the uncertain waters ahead. While regional forecasts can provide valuable guidance, the unpredictable nature of the global economy means that success lies in our own ability to adapt and innovate – making the most of the data and tools we have at our disposal.
